Gold Breaks Out, Hedge Funds Add to Long Positions

Gold Breaks Out, Hedge Funds Add to Long Positions


Gold prices broke out Tuesday during this holiday shorted session pushing through the December highs despite a stronger USD and unchanged US yields.

There was very little data to drive prices following Monday’s US Durable goods orders which was weaker than expected and a downgrade in projected US GDP by the Atlanta Fed.

Riskier assets started to consolidate which helped the precious Yellow metal continue to gain a foothold.

Technical Analysis: Gold prices broke out above the December highs near 1,486, breaking through a downward sloping trend line and is now set up to test the November highs at 1,516.

Support is seen near the 50-Day MA at 1,477, which coincides with the downward sloping trend line. Additional support is seen near the 10-Day MA at 1,470.

Short term momentum is re-accelerating as the fast stochastic generated a crossover buy signal. The only caveat is that the fast stochastic is printing a reading of 87, above the overbought trigger level of 80, which could foreshadow a correction.

Medium-term momentum is positive as the MACD histogram prints in the black with an upward sloping trajectory which points to higher prices.

The RSI is accelerating higher pointing to accelerating positive momentum.

Hedge Funds Long Gold

Hedge funds added to their Long position in futures and options according to the latest COT report released for the date ending 17 December 2019.

According to the CFTC, managed money increased Long position in futures and options by 18.5-K contracts while reducing Short position in futures and options by 3-K contracts.

Open interest that is Long futures and options outnumbers open interest that is short futures and  options by a ratio of nearly 10-1. This leaves the gold market vulnerable to a Long liquidation later.

Have a Happy Holiday Week

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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